VICTOR R. DEL ROSARIO RICE MILL CORPORATION, PETITIONER, VS. HON. REY LEONARDO B. GUERRERO, IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF [THE BUREAU OF] CUSTOMS, ATTY. ERASTUS SA…

Del Rosario Rice Mill versus Guerrero

The Case

This is a petition for review on certiorari brought by Victor R. Del Rosario Rice Mill Corporation against the Commissioner of Customs, the district collector of the Manila International Container Port, and the Bureau of Customs. The rice mill asks the Supreme Court to reverse the Court of Tax Appeals En Banc, which had affirmed the dismissal of its petition for lack of jurisdiction. The case matters because it fixes the boundary between the tax court's appellate jurisdiction and the administrative remedy of appeal to the customs commissioner, and because it shows how the doctrine of exhaustion of administrative remedies governs, and limits, judicial review of abandonment decrees under the Customs Modernization and Tariff Act.

Procedural History

The rice mill filed a petition for review before the Court of Tax Appeals, raffled to its Special Second Division. In a decision dated June 28, 2022, the Special Second Division dismissed the petition for lack of jurisdiction, holding that the Consolidated Order of the customs commissioner affirming the district collector's order was not appealable to the tax court, and that the petition was filed beyond the period to appeal. A motion for reconsideration was denied in a resolution dated January 20, 2023.

The rice mill elevated the case to the Court of Tax Appeals En Banc. In a decision dated July 18, 2024, the En Banc denied the petition and affirmed the division's decision, holding that the division had no jurisdiction because the remedies under Customs Memorandum Order Number 17-2019 required exhaustion of administrative remedies before any judicial appeal. The rice mill then filed the present petition for review on certiorari before the Supreme Court.

Facts

The rice mill imports rice under its allocation in the Minimum Access Volume Rice Importation Program of the National Food Authority. For shipments from February to September 2018, it applied for import permits. One requirement for a permit is advance payment of customs duties and taxes. The rice mill paid, and amounts were applied and remitted to the Bureau of Customs through the Bureau of Treasury by virtue of LandBank debit advices dated January 9, 2018 and July 27, 2018. The permits were issued between February and September 2018, and the rice mill filed its goods declarations or import entries from March 20, 2018 to October 17, 2018.

On January 12, 2019, the district collector and a customs operations officer sent a Notice to Pay to the rice mill by electronic mail. The notice stated that the shipments appeared in the inventory of assessed but not yet paid shipments for June to December 2018, and recommended an order of abandonment under Section 1129 of the Customs Modernization and Tariff Act because no duties and taxes had been paid and the fifteen-day period had lapsed. The rice mill claims it never received any electronic mail. When it followed up on January 24, 2019, it discovered that decrees of abandonment had been issued.

The rice mill filed letter-appeals and motions to set aside the abandonment. The district collector affirmed the decrees on February 27, 2019, without prejudice to an appeal to the customs commissioner. On April 1, 2019, the customs commissioner issued a Consolidated Order affirming the abandonment. On May 2, 2019, he approved the district collector's request for public auction, which the rice mill received on May 8, 2019. On May 21, 2019, the rice mill filed its petition before the Court of Tax Appeals.

Issues

• Whether or not the Court of Tax Appeals has jurisdiction over the rice mill's petition for review.
• Whether or not the rice mill's right to due process was violated.

Applicable Provisions

Section 7 of Republic Act Number 1125, as amended by Republic Act Number 9282, defines the tax court's jurisdiction:

SEC. 7. Jurisdiction. — The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: …. (4) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs[.]

This is the jurisdictional hook the rice mill invoked, and the Court used it to locate the proper remedy before the customs commissioner.

Items 5 and 6 of Customs Memorandum Order Number 17-2019 set the finality rule:

The Decision of the District Collector duly confirmed by the Office of the Commissioner shall become final and executory within fifteen (15) days from receipt by the owner/importer/consignee of the questioned Order/Decree/Decision unless appealed to the Commissioner in the manner and time specified in Section 114 of the [Customs Modernization and Tariff Act], which allows appeal from any decision/omission of the Bureau pertaining to an importation; exportation, or any legal claim.

The appeal shall set forth new/specific arguments/grounds not raised in the Motion to Recall/Lift/Reconsider/Set Aside any Order/Decree/Decision of Abandonment and with arguments which were simply glossed over, overlooked and/or not treated at all in the appealed Decision.

These items supply the fifteen-day period whose lapse made the Consolidated Order final and executory.

Section 1129 of the Customs Modernization and Tariff Act, as quoted in the decision, provides on notice:

The due notice requirement under this section may be provided by the Bureau through electronic notice or personal service[.]

This provision supports the finding that notice by electronic mail substantially complied with due process.

Ruling

On the first issue, the Court held that the tax court has no jurisdiction. The tax court exercises exclusive appellate jurisdiction over decisions of the customs commissioner, but the principle of exhaustion of administrative remedies comes into play before judicial review may be triggered, unless the circumstances fall within the recognized exceptions. Under Items 5 and 6 of Customs Memorandum Order Number 17-2019, the decision of the district collector confirmed by the commissioner becomes final and executory after fifteen days from receipt. The rice mill received the Consolidated Order on May 3, 2019, so its recourse was to appeal to the customs commissioner within fifteen days. It filed its petition before the tax court only on May 21, 2019, by which time the Consolidated Order had become final and executory. The later resolution approving the auction did not stall the period.

The Court then examined the exceptions to the doctrine, as enumerated in De Leon versus Asombrado-Llacuna, including estoppel, a patently illegal administrative act amounting to lack of jurisdiction, unreasonable delay, a purely legal question, urgency of judicial intervention, great and irreparable damage, violation of due process, and absence of any other plain, speedy and adequate remedy. The Court found none of them present.

On the second issue, the Court held that there was no violation of due process. The rice mill was sufficiently informed at the crucial stages before the matter reached approval for auction. As a regular and veteran importer, it was familiar with the procedures and rules on rice importation, and the notice sent by electronic mail substantially complied with the due notice requirement under the customs administrative order and Section 1129 of the Customs Modernization and Tariff Act. The Court also noted that the advance payment of duties and taxes did not automatically translate into actual payment, since the amounts were merely earmarked for future payments to the Bureau of Customs.

Doctrine

A Bar candidate should retain these rules. First, the Court of Tax Appeals exercises exclusive appellate jurisdiction over decisions of the Commissioner of Customs, but that jurisdiction is reached only after the administrative remedy of appeal to the commissioner is exhausted, save for the recognized exceptions. Second, under Customs Memorandum Order Number 17-2019, the district collector's decision confirmed by the commissioner becomes final and executory fifteen days from receipt by the importer, and an appeal to the commissioner must raise new or specific grounds not raised below or grounds overlooked in the appealed decision. Third, the exceptions to the doctrine of exhaustion of administrative remedies are narrow and must be shown by the facts; a bare assertion that appeal would be futile does not suffice. Fourth, notice by electronic mail is a permitted mode of service under Section 1129 of the Customs Modernization and Tariff Act, and a regular importer is presumed familiar with customs procedures.

Disposition

The petition was denied, and the decision of the Court of Tax Appeals En Banc was affirmed; the respondents prevailed.

Remember This

Memorize this line: the confirmed abandonment decree becomes final and executory fifteen days from receipt, and the tax court cannot entertain a petition filed after that period. Examiners use this case to test exhaustion of administrative remedies and the finality rule in customs abandonment proceedings.